When you first fantasized about your retirement all those decades ago, you probably assumed you were going to leave the workforce at a respectable 65 with a full pension. But like any fantasy, it rarely matches reality. Now that you’re older and you’ve gained some experience, you know that retirement isn’t as cut and dry as it once was. It’s especially harder now that your adult children are still living with you. Though you love them, they represent an expense you weren’t expecting in your golden years, and their addition can postpone your retirement indefinitely.
Parents helping their adult children financially has become the new normal. A new report from the Pew Research Center reveals the number of young adults living with their parents is rising. Not only are more of them staying at home, but they’re also living with their parents for longer than any other generation before them.
If this sounds familiar, your grown children could be an indefinite addition to your household. Whether they came home after graduation or they never left, you need to make sure you manage your finances carefully before they stop you from retiring on time.
Make House Rules for Living at Home
One way to protect your nest egg from adult children is to establish clear ground rules. Without this system in place, it’s easy for your children to live like royalty without pulling their weight. Make sure they understand that they’re expected to contribute towards rent, food, gas, and utilities if they earn a living — even if it’s just a part-time job at a local restaurant. If they remain unemployed, talk to them about how they can help in other ways, like chipping in with household chores and other duties around the home.
Help them budget responsibly
Offering your children a place to live isn’t the only way you can help them financially. Setting a good example through budgeting and saving will help them leave your home faster. Make sure your children understand the value of a household budget. When they can track their expenses, they can identify harmful spending habits that may potentially stop them from moving out. A budget also helps them contribute regularly to their student debt and other obligations.
Whatever you do, don’t dip into your retirement savings
When your children add expenses to your household budget, their addition to the family home can limit your financial flexibility. You may find it difficult to cover surprise expenses that you didn’t budget for, like an unexpected household repair.
Experts recommend having $1–1.5 million in your nest egg by retirement. When you’re getting close, it may be tempting to cash in on some of your savings to cover these expenses, but don’t withdraw from these accounts. Withdrawals from your 401(k) before you’re 59 1/2 are subject to a 10 percent Federal tax penalty, on top of the normal income tax deductions. Relying on this account regularly can also harm your ability to provide for yourself once your children leave and you can retire.
A more responsible use of your money is using an installment loanfor small financial hiccoughs. You can get an installment loan quickly from cash lenders like MoneyKey that operate primarily online. Without physical locations, they aren’t limitedby branch hours when they can process applications. As a result, they often provide cash faster than conventional sources. These lenders can accept your application at any time—day or night. Depending on if you qualify, you can receive your loan by the next business day — letting you cover your responsibilities quickly without ever touching your nest egg.
When your child was born, you probably didn’t think he or she would be living with you when they reached their 30s. But life rarely happens the way you expect it. Don’t make these surprise twists and turns any harder than they have to be. If you have adult children still at home, provide for them in a way that doesn’t harm your chances of retiring.
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